06.05.201820:54:00UTC+00U.S. Payrolls Rise, Jobless Rate Drops in April

U.S. hiring bounced back in April and the jobless rate fell below four percent for the first time since 2000, while wage gains cooled in an indication that the labor market is not yet tight enough to fuel inflation. This will likely keep the Federal Reserve on a gradual path of monetary policy tightening.

Nonfarm payrolls increased by 164,000 jobs in April, the Labor Department said. Data for March was revised to show the economy adding 135,000 jobs instead of the initially posted 103,000. That was the fewest amount of jobs created in six months and followed an outsized gain of 324,000 in February.

The decline of two-tenths of a percentage point in the jobless rate from 4.1 percent in March pushed it to a level last seen in December 2000 and within striking distance of the Fed's forecast of 3.8 percent by the end of this year. It was the first time in six months that the unemployment rate fell/

However, 236,000 people left the labor force in April, adding to the 158,000 who quit in March. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, dropped to 62.8 percent last month from 62.9 percent in March. It was the second consecutive monthly decline in the participation rate.

Average hourly earnings increased 0.1 percent in April following a 0.2 percent gain in March. That left the annual increase in average hourly earnings at 2.6 percent.

An unemployment rate drifting further below Federal Reserve officials' estimates of levels sustainable in the long run may in their view add to upward pressure on wages and inflation. That would keep the central bank on course to hike interest rates in June for the second time this year and once or twice more after that in 2018.

Sluggish wage growth and a slowdown in hiring threaten to undercut the Trump administration's argument that its $1.5 trillion income tax cut package, which came into effect in January and is emphasized by a sharp fall in the corporate income tax rate, would boost wages and hiring.